E10 is a concept invented by Prof. Robert Shiller, who uses E10 for his Shiller P/E calculation. E10 is the average of the inflation adjusted earnings of a company over the past 10 years.

OneBeacon Insurance Group Ltd's adjusted earnings per share data for the three months ended in Dec. 2014 was $-0.390. Since most companies do not have as long as 10 years history, here we use 6 years to calculate. Add all the adjusted EPS for the past 6 years together and divide 6 will get our e10, which is $1.30 for the trailing six years ended in Dec. 2014.

As of today, OneBeacon Insurance Group Ltd's current stock price is $15.63. OneBeacon Insurance Group Ltd's E10 for the trailing six years ended in Dec. 2014 was $1.30. OneBeacon Insurance Group Ltd's Shiller P/E Ratio of today is 12.02.

During the past 13 years, the highestShiller P/E Ratio of OneBeacon Insurance Group Ltd was 34.17. The lowest was 8.71. And the median was 13.55.

Definition

E10 is a concept invented by Prof. Robert Shiller, who uses E10 for his Shiller P/E calculation. When we calculate the today's Shiller P/E ratio of a stock, we use todays price divided by E10.

What is E10? How do we calculate E10?

E10 is the average of the inflation adjusted earnings of a company over the past 10 years. Lets use an example to explain.

If we want to calculate the E10 of Wal-Mart (WMT) for Dec. 31, 2010, we need to have the inflation data and the earnings from 2001 through 2010.

We adjusted the earnings of 2001 earnings data with the total inflation from 2001 through 2010 to the equivalent earnings in 2010. If the total inflation from 2001 to 2010 is 40%, and Wal-Mart earned $1 a share in 2001, then the 2001s equivalent earnings in 2010 is $1.4 a share. If Wal-Mart earns $1 again in 2002, and the total inflation from 2002 through 2010 is 35%, then the equivalent 2002 earnings in 2010 is $1.35. So on and so forth, you get the equivalent earnings of past 10 years. Then you add them together and divided the sum by 10 to get E10.

For example, OneBeacon Insurance Group Ltd's adjusted earnings per share data for the three months ended in Dec. 2014 was:

Since most companies do not have as long as 10 years history, GuruFocus uses 6 years to do the calculation.

Current CPI = 233.808.

OneBeacon Insurance Group Ltd Quarterly Data

201209

201212

201303

201306

201309

201312

201403

201406

201409

201412

per share eps

-0.650

-0.141

0.710

-0.030

0.410

0.438

0.490

0.260

-0.010

-0.392

CPI

231.407

229.601

232.773

233.504

234.149

233.049

236.293

238.343

238.031

234.812

Adj_EPS

-0.657

-0.144

0.713

-0.030

0.409

0.439

0.485

0.255

-0.010

-0.390

201003

201006

201009

201012

201103

201106

201109

201112

201203

201206

per share eps

0.000

0.090

0.920

0.242

0.440

0.160

-0.350

0.324

0.460

0.130

CPI

217.631

217.965

218.439

219.179

223.467

225.722

226.889

225.672

229.392

229.478

Adj_EPS

0.000

0.097

0.985

0.258

0.460

0.166

-0.361

0.336

0.469

0.132

200903

200906

200909

200912

per share eps

0.340

1.350

1.140

0.761

CPI

212.709

215.693

215.969

215.949

Adj_EPS

0.374

1.463

1.234

0.824

Add all the adjusted EPS together and divide 6 will get our e10.

Explanation

If a company grows much fast than inflation, E10 may underestimate the company's earnings power. Shiller P/E Ratio can seem to be too high even the actual P/E is low.

For the Shiller P/E, the earnings of the past 10 years are inflation-adjusted and averaged. The result is used for P/E calculation. Since it looks at the average over the last 10 years, the Shiller P/E is also called PE10.

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